United States leads world in oil and gas production, IEA says

14 November, 2017, 20:41 | Author: Leticia Walters
  • Oil market could tip out of balance on rising non-Opec production

IEA cut its crude demand growth outlook by 100,000 barrels a day for this year and next, as the Wall Street Journal reports.

On the other hand OPEC demand for their oil is up to 33.42 million barrels per day (bpd) of OPEC crude next year, an increase of 360,000 bpd from its previous forecast and the fourth consecutive monthly increase in the projection from its first estimate made in July.

"Solar is forging ahead in global power markets as it becomes the cheapest source of electricity generation in many places", said Fatih Birol, executive director of the IEA.

The IEA echoed that view, saying it expects the U.S.to see a resurgence in its oil and gas industries and become the world's biggest net exporter by the end of the 2020s.

Under its "New Policies Scenario", based on existing legislation and announced policy intentions relative to emissions and climate change, the oil price should continue to rise towards $83 a barrel by the mid-2020s.

Investors increasingly opted not to bet on higher oil prices, following a report from the International Energy Agency showing it expects rising United States shale oil and gas production to at least be among the biggest gains in the history of the industry.

"While other major companies continue to maintain a presence in oil sands operations, it remains an open question whether the exit of these companies will impact prospects for oil sands development over the longer term", the IEA said.

Production fell by 470,000 barrels a day compared with October 2016 as OPEC supply fell sharply - 80,000 barrels per day - and total cartel output of 32.53 million barrels a day was 830,000 barrels a day less than a year ago. Oil inventories in the world's richest nations fell by 40 million barrels in September, breaking below 3.0 billion barrels for the first time in two years, driven in part by Hurricane Harvey, which shuttered much US refining capacity in August.

Opec said in the latest edition of the World Oil Outlook forecasts that oil would supply just over 27 per cent of worldwide energy needs in 2040, while natural gas will see its share at slightly more than 25 per cent.

After an upbeat performance last week, oil prices edged lower for a second day Tuesday.

Some analysts even predict that with oil demand declining as EVs set to replace conventional fuel vehicles, oil price could plunge to as low as $10 a barrel over the next six to eight years.

Also weighing on the oil price, is the increasing prospect of a slower pace of economic growth in China.

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